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PwC: Media Deals Rise In 2010, Deal Value Drops

January 27, 2011: PricewaterhouseCoopers reports that there were 804 mergers and acquisitions in the media and entertainment industry in 2010, up from 779 in 2009. But the value of the transactions fell year-over-year, to $33.5 billion from $37.2 billion (in deals where the prices were disclosed).

There were 28 broadcast M&A transactions in 2010, adding up to $4.1 billion, compared to 38 deals worth $2.3 billion in 2009.

"As the entertainment and media industry accelerates its transition to mobile access and dynamic content, cash reserves and improved debt financing conditions will allow companies and private equity firms to execute on M&A strategies focused on content offerings and to reach key audiences amid an increasingly digital environment," PC’s Thomas Rooney said. "With the growing influence of new media touchpoints, E&M companies may also take advantage of strategic M&A plans to expand into new geographies and acquire new technologies."

He continued, "Companies must determine how they are going to reach their audiences in an increasingly digital market. Look for E&M deal volume to continue to outperform the broader market in 2011 as media companies complete more middle-market acquisitions."

There were fewer media-industry Chapter 11 filings in 2010, reports PwC -- 21, compared to 30 the year before. The filings last year were led by ad-dependent industries, says PwC, with nine publishers filing last year. Eighteen companies in media and entertainment emerged from Chapter 11 in 2010.

PwC sees the number of companies emerging from bankruptcy and the volume of recapitalization last year are "a strong indicator that lenders are prepared to hold their position in companies under modified credit terms in the believe that improving market conditions will allow companies to regain financial footing under ... recapitalized debt levels."